Post great recession, the Unemployment rate went into double digits … +10% …. Many including us thought the new natural level of unemployment may be near 6% – prior to the great recession most believed 4% would be the all time low…

3.8% Unemployment Rate

The regular monthly Employment report from the Bureau of Labor Statistics reported last Friday, June 1 that the Unemployment rate hit 3.8% — Yes 3.8%!

Wow….

Naysayers would say this will put pressure on wages, pushing up the CPI – Consumer Price Index – indirectly forcing the FOMC (Federal Open Market Committee) to raise rates fast — possible inducing an inverted yield curve…. leading to a recession… got that… sorry for the long domino effect– but this is how Wall Street thinks… perception can become reality… Let’s check the CPI …

The CPI looks fine and has not moved up too much. Here is a possible reason why…

Jolts – Job Opening and Labor Turnover Survey

Essentially this is a relatively new statistic that many follow included the FOMC, that shows what the US Economy is producing in the form of jobs…. an increase in this chart means more jobs are available…

Consumers are the ultimate driver of an Economy, especially the US economy. By most estimates, the consumer and his/her spending makes up over 66% of the US GDP (Gross Domestic Production) a broad measure of economic health.

Employed Consumer

The highest, most blunt view of employment is the Unemployment rate, usually figured in % total unemployed.

At 4.4%, the unemployment rate has fallen to a rate many, including ourselves thought maybe possible via post great recession!

The little Economy Engine that could!

Take this job and shove it

Confident enough to walk away from the job? Sure looks like it.

Said another way, individuals have enough confidence in finding a new job, they are not afraid to walk from their current one.

A new high soon?

Job Opening- aka JOLTS

Brought to the attention of many by our current Federal Reserve Chairwoman, Janet Yellen, the job opening report also known as JOLTS report is showing clear evidence of job opportunities.

This chart helps explain why workers are not afraid to walk from their current job as well (prior chart.)

Jobs are abundant!

Total Employment to Population

Certainly the Great Recession has had lingering effects. Focusing on the move upward since 2009, one can see the line heading in the correct direction, possibly giving confidence to those above who are leaving their current job.

Bottom line, a more confident, job opportunistic consumer economy!

Full Circle Now- Higher Spending? Higher GDP?

Going back to our original statement, with so much tailwind for the consumer coming from the employment of the US Economy, it would not be a stretch to think higher spending is in the cards, and a better GDP!

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Important Disclaimer

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, please consult your financial advisor prior to investing!

Background

The is the vocal portion of J.K. Financial, Inc. a Dallas Texas Based Fee Only Total Wealth Financial Planning Firm. Founded by John Kvale, a Dallas Texas Fee only Financial Planner and Total Wealth Manager.

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